History of washing Machine

For centuries, people on sea voyages washed their clothes by placing the
dirty laundry in a strong cloth bag, and tossing it overboard, letting the ship drag
the bag for hours. The principle was sound: forcing water through clothes to
remove dirt.

The First Washing Machines:

The earliest manual washing machines imitated the motion of the human
hand on the washboard, by using a lever to move one curved surface over
another and rubbing clothes between two ribbed surfaces. This type of washer
was first patented in the United States in 1846 and survived as late as 1927 in
the Montgomery Ward catalogue. The first electric clothes washers, in which a
motor rotated the tub, were introduced into America about 1900. The motor was
not protected beneath the machine and water often dripped into it causing short-
circuits and jolting shocks. By 1911, it was possible to buy oscillating, cylinder,
domestic washing machines with sheet metal tubs mounted on angle-iron
frames with perforated metal or wooden slat cylinders inside.

Manufacturing Challenges:

From a technological perspective, washing machine manufacturers faced

a number of challenges. These included discovering a method of transferring
power from the motor to the mechanism, finding a suitable motor with
sufficient initial starting torque, and ensuring that the operator did not get an
electrical shock during operation.
In the transference of power, some washing machines were chain driven, some
belt driven and others used shafts and gears.

To overcome the initial resistance in starting a washing machine, a fractional

horsepower motor which would not burn out or overheat during the start-up
period was used.

To prevent electric shocks, the stator and rotor of the machine were enclosed in
a housing equipped with a fan to prevent overheating.

Improvements:
From the customer satisfaction perspective, a machine that would wash
without shredding the clothes needed to be developed. This meant that if the
original scrubbing machines were used, the machine had to be operated at
different speeds for different textiles. To overcome the problem, washing
machines that sloshed water through the clothing by agitation were developed.
Either the tub moved or a baffle placed inside the tub moved.

Early washing machines had a heavy, dirty, cast-iron mechanism

mounted on the inside of the tub lid. The introduction of a metal tub and
reduction gears to replace this bulky apparatus was a great improvement. By
1920, the coopered wooden tub was no longer being manufactured.

Beatty Brothers of Fergus, Ontario was the first company to produce an

agitator washing machine. The early Beatty machines had ribbed copper tubs
which were nickel or nickel-chromium plated. In the US, the first firm to adopt
agitator technology was Maytag. The vertical orientation of these machines
became the industry standard replacing the horizontal rotating axis of earlier
machines.

2
 Starting in the 1920s, white enamelled sheet metal replaced the copper
tub and angle-iron legs. By the early 1940s, enamelled steel was used and sold
as being more sanitary, easier to clean and longer lasting than the other finishes.
The sheet-metal skirt was also designed to extend below the level of the motor
mount.

In the early 1920s, a number of Canadian machines were offered with

built-in gas or electric water heaters. By the 1930s, domestic water heaters were
in many homes and the washing machine heater was of little use. The addition
of a motor-driven drain pump at this time moved the machine one step closer to
complete automaticity.

The next development of the washing machine was the fitting of a clock
timing device which allowed the machine to be set to operate for a pre-
determined length of wash cycle. Now, the operator no longer needed to
constantly monitor its action.

By the early 1950s, many American manufacturers were supplying

machines with a spin-dry feature to replace the wringer which removed buttons,
and caused accidents involving hair and hands. In 1957, GE introduced a
washing machine equipped with 5 push buttons to control wash temperature,
rinse temperature, agitation speed and spin speed.

Washing Machines in India:

Washing Machines demand in India is increasing with the changing status of
women. It is now one of the basic utilities at home. Most of the women in
India are working so there is less time left with them to do this drudgery work

3
with hands. These types of appliances really help her a lot by providing swift
to the work. The leading names in the sector of washing machines in India
have really lowered the prices of their product thus increasing the sale of
washing machines in India. Their sale further increases during the festival
seasons as different companies offer discount rates and gifts along with
washing machines and some of the best deals can be made. From a very crude
look in the beginning it has transformed into very stylish one. Now it ranges
from washing machine to washer dryers with front loading, top loading etc. In
earlier times market for washing machines in India was not very lucrative. But
with the introduction of the Japanese product in the country this sector has got
boost. Videocon introduced India's first washing machine in 1988 in
collaboration with Matsushita Electric Industrial Co. Ltd, Japan. Now there
are many brands operating at present in India covering almost all the segments
of the society.

Washing Machine Technology

To be at the top and leader in the industry they really work hard on the
technology and even look of the washing machine. With the changing status of
women the washing machine in India has also undergone transformation.
From the crude and clumsy look it is metamorphosed into modern and trendy
look. Latest technology also gives an added advantage. Electrolux has
launched Walky Talky Machine in India. The first talking machine has 90
different phrases in Hindi and English that guide a woman in each step.
Samsung has introduced Silver Nano technology in washing machine that is
an anti-bacterial technology. It destroys 99.9% of bacteria, germs and keeps
clothes bacteria free even after 30 days of washing.

4
Washing Machine Brands in India

Whirlpool is one of the leading brands that has fully automatic and semi
automatic washing machines with different capacities. Godrej prides in having
fully automatic, semi automatic and front-loading washing machine for the
cleanest wash. Along with these Hitachi, Haier, IFB, Kenstar are also giving
the best possible washing machines in India. Most of the machines now have
the facility of both washing and dyers. They wash your clothes and also make
them dry. Online reviews on different types of washing machine help
customer to select the best possible product. Every brand has its service
centers in almost all the major cities in India.

5
 Introduction Of Case Study

The Given case study is about the Company Wash Right Limited. Company
engaged in manufacturing of washing machine and company has a market all
over the India. Case study also contain the some valuable data about the
washing market in India.

Case study shows the Market position of washing machine in India. Like what
are the market value in India. What are the demand drivers of the product.
General study of geographical distribution of product in India.

Apart from this study emphasising deeply in to the market. Like major
players of the washing machine, Market shares of the players, Entry of foreign
player in to the Indian market. Case study also shows the down trends of
Market. And how it contributes to economy.

Beside this the entire case study is on the company Wash Right Limited.
Study shows the entire life of the company. When the company started, how it
will came in to the partnership with it’s foreign partner, company’s strength
and weakness.

What is the financial position of the company. And how company suffer from
it company’s issues. How company initially start their production. And what
are the distribution system they follow. What are the financial position of
company how much they borrow from the market. What is their sales per year
and implication of their strategies.

6
 Data Obtain from the case study

The washing machine market In India is valued at Rs. 1500 crore and is
growing at the rate of 22% per year. The fully automatic and semi-automatic
sub category is growing at the rate of 40% and 17% respectively. Washing
machine sales is cyclical in nature and its sales commences with the onset of
monsoon.

Major Player in the market are:

 Videocon
 IFB
 Onida
 Samsung has market share of 17%
 LG is the leader with 27% of market share.
 Whirlpool has a market share of 17%.

7
 Company Shares in Market

17%

39% Samsung LG

Whirlpool Others

27%

17%

Washing Machine Market in India in 2006 – 2007

Market Share in 2006

15%

Major Player

Small Player

85%

8
 Market Share in 2007
30%

Big Player

Small Player

70%

Demand Drivers in Sector:

 Increase in Disposable income

 Rapid urbanization
 Increase in nuclear families
 Increasing in No. of Working women
 Growth in per capita income
 Greater variety of choice
 Increasing in consumerism

Geographically Distribution:

9
Demand Based upon the Urban and Ruler:

10
 Overview on Wash Right Limited

Company started in 1998 with joint venture. Company is engaged In the

manufacturing of washing machine. In the initial phase company started
assembling the washing machine. Company acquired superior technology from
its japanes partner.

Company had a drastic profit In its earlier years. Company had to able to get
30% of increase in sales. Which was a strength of the company. Other than that
company had an advantage of the technology due to that company can put their
product price as low compare to other players. After that company entered in to
the MOU with 40 well-known Distributers all over the country. Company had
an agreement with other 300 agencies which agreed to display and sell its
product.

Year 2008 for WRL:

11
WRL started experiencing a decline in its sales. This started happening from the
beginning of 2008. After that company made an number of changes for recover
the dunk. Company tried so many options but they did not able to control the
downfall of sales. Company’s sales was fall by 10% in the 2008.

which lead to creating tension between the company and it’s japans partner.
Company started to digging for development it’s Financial condition.

Reason for decline:

 Huge interest liabilities

 Short term borrowing
 Continuous increase in inventory levels

12
Marketing strategy

13
Q. 1 which in your opinion is the most lucrative sales promotion
options for increasing sales. The top management was interested
in knowing the complete financial implications of each of the
options suggested and then you are required to develop a
comprehensive marketing plan .You will have to choose at least
one option.
Ans.1

A marketing strategy is broad directional statement indicating how the

marketing objectives will be achieved. It provides the method for accomplished
the objectives. While marketing objectives are specific, quantifiable, and
measurable, marketing strategies are descriptive, mainly 19 types of marketing
strategies we used.

19 Different Marketing Strategies:

1. Building the market versus stealing market share

2. National, regional, or local markets
3. Seasonality
4. Spending
5. Competition
6. Target market
7. Product
8. Naming
9. Packaging
10.Pricing
11.Distribution/ penetration or coverage
12.Personal selling/ service. Operations
13.Promotion/events
14.Advertising message
15.Advertising media
16.Internet media
17.Merchandising
18.Public relations
19.Marketing research and testing

14
Out of these 19 marketing strategy below 5 are I would suggest for the
increasing sales:

1. Seasonality
2. Target market
3. Promotion/events
4. Advertising Message
5. Market Research

1) Seasonality

1. People tend to buy more products during seasonal celebrations than the
rest of the year. 

2. People are determined to purchase products, so it is easier to persuade

them to purchase a product you offer (assuming of course you are doing it
the right way). 

3. Most purchases concern gifts to others, therefore quality is what

matters while price is less significant. 

4. The time of celebration is limited and specific. Therefore people

cannot leave for tomorrow what they need to buy for the celebration.
They must act in a timely manner. This urgency is a huge advantage to
marketers trying to sell products. 

One other motivating factor for buyers is that seasonal products are
limited and something they have in-mind may not be available in the
stores at a different time. 

5. People connect seasonal celebrations with their childhood. That makes

15
 them more emotional and as you might already know emotion is the key
factor that makes people buy a product. 

6. It is not always necessary to offer a celebration related product to

increase your sales. Even a valued Internet product like software or e-
books can be a valued gift. 

7. Marketers do not have to invent new or never before used methods to

create interest in seasonal products. The old traditional marketing
techniques are effective and can still be applied. People want to buy
because of the "celebration". In fact, many people may not see their
purchase as buying at all, but as an act of making someone (including
themselves) more happy
2) Target Marketing
The focus of marketing effort is people. The goal is to reach a subset of
the population who may be interested in your particular product. That
group of people is your target market.

The term target market is used because that market is the target at which
you aim all your marketing efforts. The markets you are trying to reach
are people with common characteristics that set them apart as a group.
The more you know about a target market, the more precisely you can
develop your marketing strategy. The table below shows some examples
of market segments (or groups):

Type of Market
Shared Group Characteristics
Segment
Demographic Measurable statistics such as age, income, or
Segment occupation.

16
 Psychographic Lifestyle preferences such as music lovers or
Segment urban dwellers.
Frequency of usage such as recreational drinking
Use-based Segment
or traveling.
Desire to obtain the same product benefits such as
Benefit Segment
luxury, thriftiness, or comfort from food.
Geographic Location such as home address or business
Segment address.

3) Advertising:
Advertisement is any paid form of non personal presentation and
promotion of ideas, goods, or services by an identified sponsor. Ads can
be a cost-effective way to disseminate messages whether to build a brand
preference or to educate people.
In developing an advertising program, marketing managers must
always start by identifying the target market and buyer motives.
Then they make the five major decisions, known as the five Ms:
Mission, Money, Message, Media, Measurement
Ref: Kotler

4) Promotion
It is a key ingredient in marketing campaigns, consists of a collection of
incentives tools, mostly short term, designed to stimulate quicker or
greater purchase of particular products or services by consumers or the
trade.
Whereas advertising offers a reason to buy, sales promotion offers an
incentive to buy, sales promotion includes tools for consumer promotion
(sample , coupons, cash refund offers prices off, premiums, prizes,
patronage rewards, free trials, warranties, tie-in promotions, cross –
promotions, demonstrations)
17
 Ref : kotler

5) Market Research:

Market research is any organized effort to gather information

about markets or customers. It is a very important component of business
strategy. The term is commonly interchanged with marketing research;
however, expert practitioners may wish to draw a distinction, in
that marketing research is concerned specifically about marketing
processes, while market research is concerned specifically with markets.

Market research is for discovering what people want, need, or believe. It

can also involve discovering how they act. Once that research is
completed, it can be used to determine how to market your product.

Questionnaires and focus group discussion surveys are some of the

instruments for market research.

Here I suggest Market Research for increase the sales. Because our
product Washing Machine is attached with inventions. Every time new
technologies come in to the market in the washing machine people tend to
buy and attract to buy the product.

18
Financial Implication of suggested Marketing Strategy:

Financial Implication% on Expanses

80%

70%

60%

50%

40%

30%

20%

10%

0%
Seasonality Target Market Promotion Advertising Message Market Research

Financial Implication% on Expance

Here chart shows the Financial implication % on the expanses. Company’s top
management used to borrow the fund at the rate of 15%.

Due to that company currently suffer from much short term liabilities.

Here in chart the figures suggest that seasonality marketing strategy will have
20% more expanse on the pre planed expanses amount. Same as target market,
and so on.

So here I would suggest company that at this point of time company should do
seasonality marketing strategy for increase their sales.

19
Comprehensive Marketing Plan

 Executive summary
 Situation analysis
 Marketing strategy
 Financial Projection
 Implementation Control

Marketing plan for Wash Right Limited:

Executive Summary:

Wash right limited is a joint venture company. Which was started in 1998. In
Initial Phase Company assemble the washing machine. Company has an
advantage of japans technology which give the benefit for the low cost
production to company. Company suffering from many reasons like, dawn fall
in sales, Borrowings, un uniform distribution system.

Company will initially focus on increase the selling of washing machine. Down
the time company will focus on its financial condition and how to develop its
distribution channel. It plans to do this with internal and external strength.
Company aspires to be a leading washing machine manufacturing company in
India.

Situation analysis:

This will focus on the sales, cost, market, competitors and various forces in the
microenvironments. How do we define market , how big it is?, how fast is it
growing?, what are the relevant trends. What are the product offering and what
are the critical issues do we face?

20
SWOT of WRL :

 Superior Japanes Technology  Distribution System

 MOU with 40 well-known
 Short Term Borrowings
Distributer
 High inventory level
 Agreement with 300 Dealer

 Penetration through its  Well known players in market

Distributer
 Competition in Price and
 Tap in ruler area Innovations

Marketing strategy:

In this section the marketing manager will decide how they launch the product
in the market. And they communicate with their target market. How they
promote the brand in competitive market. Here the mission of the company
would be to penetrate more in to the market.

For that company will take on action on different marketing strategy. Which I
suggest before in this report.

1. Seasonality
2. Target market
3. Promotion/events
4. Advertising Message
5. Distribution / Penetration

21
Financial Projection:

In this section manager will suggest the complete financial plan for its
marketing plan. Like at what time they going to how much fund on what
activity for increase the sales of company.

(all figures in lacs)

Month Break Even Expected Expected

Volume/month expense/month sales/month
July 70 4 96
August 50 3.2 80
September 45 2.9 72
October 42 2.4 70
November 40 2 68
December 38 2 65

Implementation controls:

This section is basically on the monitoring. The top management will

monitoring each of the section which suggested in marketing plan on month on
month and every quarter.

They find out the figures and results in each and every section and activity.

Cash Budget

22
Q.2 You are required to prepare a Cash Budget in respect of 6 months from
July to December from the information given in the table in the case to

23
 enable management to plan for financial requirements. Your report
must include recommendation for cost reduction from the data.

Amount (in Lakes)

Octobe
Particulars
July August September r November Decemb
             
Opening Balance Of Cash 150 754 714 1027 1228.5 1593.8
             
Add:-
Receipts
Cash sales 200 200 200 200 200 200
Credit sales 1000 600 800 1000 1200 1400
             
10% calls on ordinary share capital of
400 lakhs 40 - 40 - - -
Dividend on investments  - - - - 0.3 -

Total A 1390 1554 1754 2227 2628.8 3193.8

Less:-
Payments            
Materials 400 600 400 600 700 800
Wages 80 80 100 100 100 110
Production Overheads 56 46 56 54 58 60
Administration overheads 30 29 30 30 31 31
Selling overheads 15 14 19 20 22.5 21.5
Research and Development 9 13 14 14.5 14.5 17
Distribution overheads 12 14 14 16 15 16
Plant & Machinery  - - 40 - - -
Hire purchase expenses 4 4 4 4 4 4
Sales commission on credit sales @
5% 30 40 50 60 70 80
Income tax - - - 100 - -
Preference share dividend @ 10% of
200 lakes -  - - - 20 -

Total B 636 840 727 998.5 1035 1139.5

Balance at the end of month/ Closing 754 714 1027 1228.5 1593.8 2054.3
Recommendation for reduce the cost:

24
In the cash budget there are two type of costs

1) Fixed cost
2) Variable Cost

We can not alter the fixed cost, though they are fixed for the particular volume
of production .

We have only the option is variable cost in which we can alter and can reduce
the cost.

Here variable costs are:

 Distribution cost of products

 Selling Commission

Are two major contributor for increase the cost per unit.

We can make some another format for selling commission so we can reduce the
cost per unit.

And another option is use some different way of distribution system so we can
reduce the cost of Distribution.

By these two reduction we can reduce the cost per unit.

25
ERP & MRP:

26
 Q.3 critically analyzes the ERP and MRP for Wash Right and suggests
the most suitable option.

ERP:

Enterprise resource planning (ERP) is an integrated computer-based system

used to manage internal and external resources including tangible assets,
financial resources, materials, and human resources. It is a software architecture
whose purpose is to facilitate the flow of information between all business
functions inside the boundaries of the organization and manage the connections
to outside stakeholders. Built on a centralized database and normally utilizing a
common computing platform, ERP systems consolidate all business operations
into a uniform and enterprise wide system environment.

An ERP system can either reside on a centralized server or be distributed across

modular hardware and software units that provide "services" and communicate
on a local area network. The distributed design allows a business to assemble
modules from different vendors without the need for the placement of multiple
copies of complex and expensive computer systems in areas which will not use
their full capacity

Components:

Transactional backbone

 Financial
 Distribution
 Human Resource
 Product life cycle management

27
Advance applications:

 Customer relationship management

 Supply chain management
 Warehouse management

Management Portal:

 Decision support system

Commercial application:

Manufacturing 

Engineering, bills of material, scheduling, capacity, workflow management,

quality control, cost management, manufacturing process, manufacturing
projects, manufacturing flow

Supply chain management 

Order to cash, inventory, order entry, purchasing, product configuration, supply

chain planning, supplier scheduling, inspection of goods, claim processing,
commission calculation

Financials 

General ledger, cash management, accounts payable, accounts receivable, fixed

assets

Project management 

Costing, billing, time and expense, performance units, activity management

Human resources 

28
Human resources, payroll, training, time and attendance, rostering, benefits

Customer relationship management 

Sales and marketing, commissions, service, customer contact and call center
support

Data services 

Various "self-service" interfaces for customers, suppliers, and/or employees

Access control 

Management of user privileges for various processes

Example:

29
Epicor, Infor, Microsoft dynamics, Oracle, SAP

MRP:

Material Requirements Planning (MRP) was an early iteration of the

integrated information systems vision. MRP information systems helped
managers determine the quantity and timing of raw materials purchases.
Information systems that would assist managers with other parts of the
manufacturing process, MRPII, followed. While MRP was primarily concerned
with materials, MRPII was concerned with the integration of all aspects of the
manufacturing process, including materials, finance and human relations.

Material Requirements Planning (MRP) and Manufacturing Resource

Planning (MRPII) are both incremental information integration business process
strategies that are implemented using hardware and modular software
applications linked to a central database that stores and delivers business data
and information.
MRP is concerned primarily with manufacturing materials while MRPII
is concerned with the coordination of the entire manufacturing production,
including materials, finance, and human relations. The goal of MRPII is to
provide consistent data to all players in the manufacturing process as the
product moves through the production line.
Paper-based information systems and non-integrated computer systems
that provide paper or disk outputs result in many information errors, including
missing data, redundant data, numerical errors that result from being incorrectly
keyed into the system, incorrect calculations based on numerical errors, and bad
decisions based on incorrect or old data. In addition, some data is unreliable in
non-integrated systems because the same data is categorized differently in the
individual databases used by different functional areas.
MRPII systems begin with MRP, Material Requirements Planning. MRP
allows for the input of sales forecasts from sales and marketing. These forecasts
determine the raw materials demand. MRP and MRPII systems draw on a
Master Production Schedule, the breakdown of specific plans for each product
on a line. While MRP allows for the coordination of raw materials purchasing,
30
MRPII facilitates the development of a detailed production schedule that
accounts for machine and labour capacity, scheduling the production runs
according to the arrival of materials. An MRPII output is a final labour and
machine schedule. Data about the cost of production, including machine time,
labour time and materials used, as well as final production numbers, is provided

from the MRPII system to accounting and finance (Monk and Wagner).

Benefits of MRP:

MRP II systems can provide:

 Better control of inventories

31
 Improved scheduling
 Productive relationships with suppliers
For Design / Engineering:

 Improved design control

 Better quality and quality control
For Financial and Costing:

 Reduced working capital for inventory

 Improved cash flow through quicker deliveries
 Accurate inventory records

Problems of WRL:

 Inventory level
 Agreement with supplier
 Establish new models in market
 Existing stock of washing machine

So as far as our company concern the major issues are Cash shortage due to the
late account receivable, inventory level, existing stocks, and agreements with
supplier. These all problems can be overcome by applying the ERP system.

So I would suggest the ERP solution for the company. As far as the Existing
stock concern the plan may imply in the production. Like we can cut down the
production by 5%. And we can utilize the existing stock. So we can reduce our
stock level.

As well as we can maintain the relationship with our supplier and can also focus
on our financial position.

32
Distribution System:

33
Current Distribution system:

For current distribution system is based on the Region wise... in that first
they divided city in to particular regions. For each region they allocate one sales
man. Who visit the shop at least one time in the week. Who has one delivery
van which carries the previous order and sales man collect new order.

And this sales man has also a detail about the shop and turnover etc...

Every new order will passed through the regional office. For every new
order the quotation is made by the regional staff only.

Order processing software was installed in the head office. Where order
processing department issue a slip of order and according to that sales man visit
the shop and deliver the order.

Major Problems in current Distribution system:

The order processing system does not have the provision of monitoring
the partially fulfilled orders, because of which the shops do not get the complete
delivery, which leads to lost sales. The ordering procedure is faulty, as every
time a fresh order is booked, old orders are not referred back to. As a result, the
shopkeeper diverts that space to competitors' products.

These sales analyses can be carried out only on the current data. The
software does not support any level of comparison with the past data. Some
level of forecasting is also possible with this software. Forecasting is based on
the current data only. Managers can also compare the actual performance with
the forecasted sales.
34
Solution:

35
 Above diagram is the solution for the distribution system. In which the
distribution system is divided in to the four main zones. Which are connected
with Head office.

Again the for zones are divided in to their main cities. And further main
cities are divided in to the particular regions.

Now in new distribution system the process starts from the order. Here
every particular regions their own computer systems. In which they can log in
the order. Which is reflected on the city’s computer’s system. And the same
order reflected on the zonal office as well as HO.

Here this system will be made on the FIFO system which is used to
maintain the inventory level. Like First in First Out. It means when second time
any order will come the system will automatically reflect the previous order and
the status of the previous order. So each of one can see the status of the orders.
Where each of one will come to know that how many previous orders are still
pending.

So by this we can monitor the system from each level. Regions, City,
zones, HO. So the result will lost of customer will decrease...

Here system is centralised so whenever the new order come the quotation
will be made by the HO also. So top management can give discount also
according to order.

This new system will be integrated system which can give all kind of
format like. Geographically , statistically, Demographic.. so by this we can
overcome the problem of comparison of the sales data.

So the manager of city and region can compare the data of sales with their
previous sales data.

36
Name of distribution software

ASC Trac by ASC software

Top self by Scout

Apprise by Apprise software

37
Compensation & Appraisal:

38
Q.5 Prepare a Performance Appraisal system and a proper compensation
management system for lower to upper management level employees of
the company.

Performance Appraisal System:

The operation may have succeeded, but the patient died.- By anonymous

However, performance motivation depends on the situation, how it is

perceived and the need of people. The connection between performance and
rewards must be visible, and a climate of trust and credibility must exist in the
organization. The belief that performance will lead to rewards is essentially a
prediction about the future. The reward systems in hierarchical organization act
as a strong motivation to learn those skills that are perceived to lead to
promotion. If the reward system is objective, transparent and communicated
properly it can also contribute to the overall culture and climate in the
organization. Depending on how reward systems are developed, administered
and managed, they may cause the culture of an organization to a large extent.
The reward system should be designed to promote the kind of performance
needed by an organization.
Most performance management systems are significantly flawed and
don’t deliver the results executives seek. When analyzing the various practices-
both effective and non-effective- start by looking at three distinct components
of any performance management system. The first component captures,
quantify, measure or evaluate an employee’s performance? Second how is that
performance rewarded? Is there a link between performance and rewards?
Finally what is company’s employee development approach? How are
employees being developed and supported to deliver superior performance? All
these have impact on the culture of the organization. Performance management

39
is about creating a system that provides employees with organizational direction
and priorities, makes them aware of their current performance levels, supports
them through training and coaching and rewards those who demonstrate high
performance. It is like a compass; one that indicates a person’s actual direction
as well as person’s desired direction. It requires willingness and a commitment
to focus on improving performance at the level of the individual or team every
day.

The broad process of performance management requires the following:

• Direction: Clarity of vision, strategy and objectives. This provides focus and
channels efforts in the right direction.

• Awareness: is to improve performance. Feedback to include appreciation and

suggestions for improvement. Feedback should motivate the employee to
perform better.

• Support: Employees need support to work on their improvement areas.

Organizations should provide training, coaching to improve their performance

• Rewards: Positive reinforcement is given through rewards and recognition for

employees.

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Methods of Performance Appraisal

1. Behaviorally anchored rating scales.

This method used to describe a performance rating that focused on specific
behaviours or sets as indicators of effective or ineffective performance. It is a
combination of the rating scale and critical incident techniques of employee
performance evaluation.

2. Graphic rating scales

The Rating Scale is a form on which the manager simply checks off the
employee's level of performance.
This is the oldest and most widely method used for performance appraisal.

3. Essay Evaluation
This method asked managers / supervisors to describe strengths and weaknesses
of an employee's behavior. Essay evaluation is a non-quantitative technique.
This method usually use with the graphic rating scale method.

4. Performance ranking method

Ranking is a performance appraisal method that is used to evaluate employee
performance from best to worst. Manager will compare an employee to another
employee, rather than comparing each one to a standard measurement.

5. Critical incident method

The critical incidents for performance appraisal is a method in which the
manager writes down positive and negative performance behavior of employees
throughout the performance period.

6. Weighted checklist

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This method describe a performance appraisal method where rater familiar with
the jobs being evaluated prepared a large list of descriptive statements about
effective and ineffective behavior on jobs.

7. Paired comparison analysis

Paired comparison analysis is a good way of weighing up the relative
importance of options.

A range of plausible options is listed. Each option is compared against each of

the other options. The results are tallied and the option with the highest score is
the preferred option.

8. Behavioral Observation Scales

Behavioral Observation Scales is frequency rating of critical incidents that
worker has performed.

9. 360 degree performance appraisal

360 Degree Feedback is a system or process in which employees receive
confidential, anonymous feedback from the people who work around them.

10.Forced ranking (forced distribution).

Forced ranking is a method of performance appraisal to rank employee but in
order of forced distribution. For example, the distribution requested with 10 or
20 percent in the top category, 70 or 80 percent in the middle, and 10 percent in
the bottom.

11. Management By Objectives (MBO)

MBO is a process in which managers / employees set objectives for the
employee, periodically evaluate the performance, and reward according to the
result. MBO focuses attention on what must be accomplished (goals) rather than
how it is to be accomplished (methods)

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 Performance Appraisal System for WRL:

For WRL Need of Performance Appraisal system is to increase Motivational

levels and increase the sales.

Appraisal Process:

Structure Of Organisation:

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Performance standard for Employees:

Designation Sales Volume Incentives

Zonal Manager 100% Achievement High Value Gift
Cluster Head 500 pics. 2% of total sales volume
Sr. sales Manager 100 pics. 5 % of sales volume
Sales Manager Per piece Incentive 1000 Rs. Per pic.

Communicating the Standards:

Once the management the prepare the performance standards company need to
communicate this standards with their employee.

Like company can mail this standard performance to their employee. Or passes
this information through the channel.

Measuring the actual performance:

At the end of particular time period company need to the measure the actual
performance of the employee. Like how much they achieve their targets and at
what percentage they lack by the targets.

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Discuss the results & Decision Making:

After the measuring company need to the discuss the results with one to one
employee. Either by any media of communication. According to that employee
can get their rewards.

Motivation:

Most companies have it all wrong. They don't have to motivate their employees.
They have to stop demotivating them.

Demotivate employee the great majority of employees are quite enthusiastic

when they start a new job. But in about 85 percent of companies, our research
finds, employees' morale sharply declines after their first six months—and
continues to deteriorate for years afterward - Sirota Survey Intelligence
(Purchase, New York).

How Management Demotivates:

There are several ways that management unwittingly demotivates employees

and diminishes, if not outright destroys, their enthusiasm.

Many companies treat employees as disposable. At the first sign of business

difficulty, employees—who are usually routinely referred to as "our greatest
asset"—become expendable.

Employees generally receive inadequate recognition and reward: About half of

the workers in our surveys report receiving little or no credit, and almost two-
thirds say management is much more likely to criticize them for poor
performance than praise them for good work.

Management inadvertently makes it difficult for employees to do their jobs.

Excessive levels of required approvals, endless paperwork, insufficient training,
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failure to communicate, infrequent delegation of authority, and a lack of a
credible vision contribute to employees' frustration.

Management is much more likely to criticize them for poor performance than
praise them for good work.

Compensation:

Compensation is an integral part of human resource management which

helps in motivating the employees and improving organizational
effectiveness. 

Direct Compensation

 Basic salary

 House rent

 Medical

 Bonus

Indirect Compensation:

• Leave policy

• Over time Policy

• Hospitalization

• Insurance

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Reference:

 Phillip Kotler 13th edition pg no. 57 to 59

 "Stop Demotivating Your Employees!" Harvard Management
Update, Vol. 11, No. 1, January 2006.
 WWW.wikipedia.org
 http://www.smallbusinessnotes.com/operating/marketing/targetmarket.ht
ml
 http://www.ezilon.com/information/article_13650.shtml
 http://www.ideafinder.com/history/inventions/washmachine.htm

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